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REMEDIES AFTER COVENTRY V LAWRENCE:
SHELFER SHELVED?
by
David Holland QC
Landmark Chambers
INTRODUCTION
1. Until recently, the principles applicable when a court had to decide whether to grant
an injunction or award damages in lieu were, if not exactly crystal clear, at least
flexible and generally applied by courts with a degree of commercial common sense.
However two comparatively recent Court of Appeal decisions (REGAN V PAUL
[2007] Ch 135 and WATSON V CROFT PROMO-SPORT [2009] EWCA Civ 15)
had, in seeking to clarify the law in this regard, apparently greatly reduced this
flexibility by emphasising the “exceptional” nature of the court’s jurisdiction to grant
damages in lieu.
2. This area (amongst others) has now been the subject of a review by the Supreme
Court in the very recent case on LAWRENCE V FEN TIGERS [2014] 2 WLR 433
(“the Coventry case”). The effect of this decision is, in my view, to restore the
previously applied flexibility albeit at the expense of a greater degree of uncertainty.
The case also has some interesting things to say about the calculation of damages in
lieu should a court decline to grant injunctive relief.
THE COVENTRY CASE: THE FACTS
3. The case concerned a claim for injunctive relief in respect of noise nuisance. A brief
chronology is as follows.
4. In 1975 Planning permission was granted to the Defendants for the construction of a
stadium on agricultural land near Mildenhall in Suffolk. The permission allowed use
for speedway purposes for a period of ten years. The stadium was constructed and use
began. In 1984 the stadium started to be used for stock car and “banger racing”. This
was not permitted by planning permission. In 1985 the speedway planning permission
was renewed on a permanent, albeit personal, basis. In 1992 an additional use of
greyhound racing commenced at the stadium. In 1992 a motocross track was
constructed to the rear of the stadium pursuant to a one-year personal planning
permission in respect of motocross events. This permission was renewed from time to
time thereafter, subject to conditions relating to times of use and noise levels. In 1997
a certificate of lawful existing use was granted for specified numbers of stock car and
“banger racing” events due to such use having become lawful in planning terms by
the passage of time. In 2002 permanent planning permission was granted for
motocross events, subject to conditions relating to times of use and noise levels. In
January 2006 the Claimants moved into an existing bungalow (called “Fenland”), less
than a kilometre from each of the stadium and the track, and half a mile from any
other residence. In April 2006 the Claimants begin to complain to the local authority
in relation to the noise from the track. Noise Abatement notices were served,
requiring noise mitigation works to be carried out at the defendants’ land. These noise
mitigation works were carried out (late) by 2009. However, and despite this, in 2009
the Claimants brought a claim in the High Court in private nuisance against the
Defendants, (who were various owners and operators of the track connected with the
alleged nuisance). In 2010 “Fenland” suffered a serious fire (and is not rebuilt prior to
judgment).
5. In 2011 following trial, Judge Richard Seymour QC (sitting as a deputy judge of the
High Court) granted an injunction preventing activities producing noise above
particular levels.
6. The Court of Appeal overturned the decision, holding that it had not been established
that there was a nuisance.
7. The Claimants successfully appealed to the Supreme Court. The issues before the
court were as follows:
(i) Whether the right to emit noise can be acquired by long user, whether
as an easement by prescription or otherwise;
(ii) Whether the fact that a Claimant “came to the nuisance” is capable of
being a defence;
(iii) Whether a Defendant’s activities are to be taken into account when
assessing the “character of the locality”;
(iv) Whether and to what extent the existence of a planning permission is
relevant to the question of private nuisance;
(v) As to remedies: when the court should grant an injunction to restrain
private nuisance, and on what basis should the court calculate damages.
8. In this paper, I would like to concentrate on the Supreme Court’s discussion of the
last of these issues. In order to put this into perspective it is necessary to spend a little
time recounting the state of the law prior to the Supreme Court’s decision.
DAMAGES IN LIEU OF INJUNCTION: BACKGROUND
9. Historically, the remedy given by courts of common law was damages. These
afforded retrospective compensation for past wrongs. If the wrongs were repeated or
continued, a fresh action was needed. Courts of equity, in contrast, were able to give
prospective relief by way of injunction or specific performance. A mandatory
injunction would require the defendant to observe a legal obligation or undo the
effects of a past breach of legal obligation. A negative injunction would restrain a
defendant from committing breaches of legal obligation in future. But these courts
could not award damages.
10. This anomaly was mitigated by the Common Law Procedure Act 1854 which gave
courts of common law a limited power to grant equitable relief as well as damages. It
was further mitigated by the Chancery Amendment Act 1858 (“Lord Cairns’s Act”)
which gave the Court of Chancery the power to award damages.
11. This enabled the Chancery Court on appropriate facts to award damages for
unlawful conduct in the past as well as an injunction to restrain unlawful conduct
in the future. It also enabled the Chancery Court to award damages instead of
granting an injunction to restrain unlawful conduct in the future. As the courts
have subsequently confirmed, such damages can only have been intended to
compensate the plaintiff for future unlawful conduct the commission of which, in
the absence of any injunction, the court must have contemplated as likely to
occur. Despite the repeal of Lord Cairns’s Act, it has never been doubted that the
jurisdiction thereby conferred on the Court of Chancery is exercisable by the High
Court and by county courts.
12. The jurisdiction is currently embodied in section 50 of the Senior Courts Act 1981
which reads:
“Where the Court of Appeal or the High Court has jurisdiction to entertain an
application for an injunction or specific performance, it may award damages in
addition to, or in substitution for, an injunction or specific performance”
13. There was from the outset, a debate as to the principles applicable. When should the
court exercise this power?
14. Prior to the Coventry case, the leading case was of course SHELFER V CITY OF
LONDON ELECTRIC LIGHTING COMPANY [1895] 1 Ch 287. That case involved
what the Court of Appeal described as “nuisance of a very serious character” caused
by the Defendant’s electricity generating machinery. This caused the pub tenanted by
one Plaintiff and owned by another Plaintiff to suffer physical damage as well as
noise disturbance.
15. In discussing the applicable principles Lindley LJ said (at pages 315 to 317):
“But in exercising the jurisdiction thus given attention ought to be paid to well
settled principles; and ever since Lord Cairns' Act was passed the Court of
Chancery has repudiated the notion that the Legislature intended to turn that
Court into a tribunal for legalizing wrongful acts; or in other words, the Court
has always protested against the notion that it ought to allow a wrong to
continue simply because the wrongdoer is able and willing to pay for the injury
he may inflict. Neither has the circumstance that the wrongdoer is in some sense
a public benefactor (e.g. a gas or water company or a sewer authority) ever been
considered a sufficient reason for refusing to protect by injunction an individual
whose rights are being persistently infringed. Expropriation, even for a money
consideration, is only justifiable when Parliament has sanctioned it… Without
denying the jurisdiction to award damages instead of an injunction, even in cases
of continuing actionable nuisances, such jurisdiction ought not to be exercised
in such cases except under very exceptional circumstances. I will not attempt to
specify them, or to lay down rules for the exercise of judicial discretion. It is
sufficient to refer, by way of example, to trivial and occasional nuisances: cases
in which a plaintiff has shewn that he only wants money; vexatious and
oppressive cases; and cases where the plaintiff has so conducted himself as to
render it unjust to give him more than pecuniary relief.”(emphasis added)
In an even more famous passage, AL Smith LJ had this to say (at pages 323-4):
“Many Judges have stated, and I emphatically agree with them, that a person by
committing a wrongful act (whether it be a public company for public purposes or
a private individual) is not thereby entitled to ask the Court to sanction his doing
so by purchasing his neighbour's rights, by assessing damages in that behalf,
leaving his neighbour with the nuisance, or his lights dimmed, as the case may be.
In such cases the well-known rule is not to accede to the application, but to grant
the injunction sought, for the plaintiff's legal right has been invaded, and he is
prima facie entitled to an injunction…
In my opinion, it may be stated as a good working rule that —
(1.) If the injury to the plaintiff's legal rights is small,
(2.) And is one which is capable of being estimated in money,
(3.) And is one which can be adequately compensated by a small money payment,
(4.) And the case is one in which it would be oppressive to the defendant to grant
an injunction:—
then damages in substitution for an injunction may be given.
There may also be cases in which, though the four above-mentioned requirements
exist, the defendant by his conduct, as, for instance, hurrying up his buildings so
as if possible to avoid an injunction, or otherwise acting with a reckless disregard
to the plaintiff's rights, has disentitled himself from asking that damages may be
assessed in substitution for an injunction.”
16. It is these passages, and in particular the emphasis on the “exceptional” nature of the
jurisdiction together with the four enumerated conditions, which, in my view, have
bedevilled discussion on this area of the law ever since this case. What is worth
bearing in mind is the passage which I have omitted from the last quote form AL
Smith LJ in which he says:
“There are, however, cases in which this rule may be relaxed, and in which
damages may be awarded in substitution for an injunction as authorized by this
section. In any instance in which a case for an injunction has been made out, if
the plaintiff by his acts or laches has disentitled himself to an injunction the Court
may award damages in its place. So again, whether the case be for a mandatory
injunction or to restrain a continuing nuisance, the appropriate remedy may be
damages in lieu of an injunction, assuming a case for an injunction to be made
out.”
17. Following this case, there was what Lord Neuberger in the Coventry case (at
paragraph 117) described as “a tension and at worst an inconsistency between two
sets of judicial dicta”. One strand emphasised (in my view rightly) the flexible and
fact sensitive nature of the jurisdiction. The second strand emphasised the so-called
“exceptional” nature of the jurisdiction and bases itself on the argument that the
courts are not there effectively to sanction wrongs at the suit of those who can afford
to pay.
18. The first strand was, in my view, evident in the next significant case, the House of
Lords decision in COLLS V HOME AND COLONIAL STORES [1904] AC 179.
This was a right to light case. Lord Macnaghten said (at 192-3):
“…with regard to giving damages in addition to or substitution for an
injunction—that, no doubt, is a delicate matter. It is a matter for the discretion of
the Court, and the discretion is a judicial discretion. It has been said that an
injunction ought to be granted when substantial damages would be given at law. I
have some difficulty in following out this rule. I observe that in some cases juries
have been directed to give 1s. damages as a notice to the defendant to remove the
obstruction complained of. And then, if the obstruction was not removed, in a
subsequent action the damages were largely increased. In others a substantial
sum has been awarded, to be reduced to nominal damages on removal of the
obstruction. But the recovery of damages, whatever the amount may be, indicates
a violation of right, and in former times, unless there were something special in
the case, would have entitled the plaintiff as of course to an injunction in equity. I
rather doubt whether the amount of the damages which may be supposed to be
recoverable at law affords a satisfactory test. In some cases, of course, an
injunction is necessary—if, for instance, the injury cannot fairly be compensated
by money—if the defendant has acted in a high-handed manner—if he has
endeavoured to steal a march upon the plaintiff or to evade the jurisdiction of the
Court. In all these cases an injunction is necessary, in order to do justice to the
plaintiff and as a warning to others. But if there is really a question as to whether
the obstruction is legal or not, and if the defendant has acted fairly and not in an
unneighbourly spirit, I am disposed to think that the Court ought to incline to
damages rather than to an injunction. It is quite true that a man ought not to be
compelled to part with his property against his will, or to have the value of his
property diminished, without an Act of Parliament. On the other hand, the Court
ought to be very careful not to allow an action for the protection of ancient lights
to be used as a means of extorting money.”
19. He would not thus appear to be endorsing the rather stricter approach embodied in AL
Smith LJ’s “good working rule”.
20. However in, for example, in LEEDS V SLACK (No.2) [1924] 2 Ch 475 (another
rights to light case) the Court of Appeal specifically rejected a submission that
anything said in the Colls case has undermined what were described as “the rules laid
down in Shelfer” which the judge had applied.
21. Perhaps the clearest and most detailed account of the court’s jurisdiction to award
damages in lieu prior to the REGAN and WATSON cases was the Court of Appeal
decision in JAGGARD V SAWYER [1995] 1 WLR 269. That case involved the
breach of a restrictive covenant and the consequent trespass on a private road which
occurred when one householder built another dwelling on land which required access
over the private roadway and part of their garden. The County Court Judge refused to
grant an injunction to prevent use of what was the only access to the new house over
the private roadway and part of the garden. He awarded damages in lieu in the sum of
£694.44, such sum being one ninth share of the total sum of £6,250 which he valued
as the price the defendants might reasonably have been required to pay the nine
residents of the cul de sac for release from the covenant and for a right of way. The
Court of Appeal refused to overturn his ruling.
22. Of particular interest in my view are certain observations in the judgment of Millett
LJ (as he then was) when, having cited from AL Smith LJ’s judgment in Shelfer, he
said (at 287-8):
“Laid down just 100 years ago, A. L. Smith L.J.'s check-list has stood the test of
time; but it needs to be remembered that it is only a working rule and does not
purport to be an exhaustive statement of the circumstances in which damages may
be awarded instead of an injunction. Reported cases are merely illustrations of
circumstances in which particular judges have exercised their discretion, in some
cases by granting an injunction, and in others by awarding damages instead.
Since they are all cases on the exercise of a discretion, none of them is a binding
authority on how the discretion should be exercised. The most that any of them
can demonstrate is that in similar circumstances it would not be wrong to
exercise the discretion in the same way. But it does not follow that it would be
wrong to exercise it differently. The outcome of any particular case usually turns
on the question: would it in all the circumstances be oppressive to the defendant
to grant the injunction to which the plaintiff is prima facie entitled? Most of the
cases in which the injunction has been refused are cases where the plaintiff has
sought a mandatory injunction to pull down a building which infringes his right to
light or which has been built in breach of a restrictive covenant. In such cases the
court is faced with a fait accompli. The jurisdiction to grant a mandatory
injunction in those circumstances cannot be doubted, but to grant it would subject
the defendant to a loss out of all proportion to that which would be suffered by the
plaintiff if it were refused, and would indeed deliver him to the plaintiff bound
hand and foot to be subjected to any extortionate demands the plaintiff might
make…In considering whether the grant of an injunction would be oppressive to
the defendant, all the circumstances of the case have to be considered. At one
extreme, the defendant may have acted openly and in good faith and in ignorance
of the plaintiff's rights, and thereby inadvertently placed himself in a position
where the grant of an injunction would either force him to yield to the plaintiff's
extortionate demands or expose him to substantial loss. At the other extreme, the
defendant may have acted with his eyes open and in full knowledge that he was
invading the plaintiff's rights, and hurried on his work in the hope that by
presenting the court with a fait accompli he could compel the plaintiff to accept
monetary compensation. Most cases, like the present, fall somewhere in between”
23. It has always seemed to me that in this passage Millett LJ struck exactly, or at least
somewhere close to, the right balance.
24. However in my view (and, more importantly in the view of their Lordships in the
Supreme Court) the law took a wrong turning in the REGAN and WATSON cases.
25. The REGAN case was another rights to light case in which the owner of a maisonette
on the first and second floors of a building in Brighton had sought injunctive relief to
stop the construction of a penthouse flat in the building opposite which was 12.8
metres away. The first instance Judge had refused injunctive relief despite finding
that the completed construction of the building would constitute an actionable
interference with his right to light. He awarded damages in lieu of £5000. He held on
the authorities that, in a right to light case, the burden was on the party applying for
an injunction to persuade the court that an injunction, rather than damages, should be
awarded.
26. The Court of Appeal overturned his order and granted the injunction to prevent any
further building. Now the result in that case is very probably right. However, in
addressing the law, and in particular the judgments in Shelfer Mummery LJ said this
(at paragraph 36):
“I derive from the judgments of Lord Halsbury and Lindley and A L Smith LJJ.
(1) A claimant is prima facie entitled to an injunction against a person
committing a wrongful act, such as continuing nuisance, which invades the
claimant's legal right. (2) The wrongdoer is not entitled to ask the court to
sanction his wrongdoing by purchasing the claimant's rights on payment of
damages assessed by the court. (3) The court has jurisdiction to award damages
instead of an injunction, even in cases of a continuing nuisance; but the
jurisdiction does not mean that the court is “a tribunal for legalising wrongful
acts” by a defendant, who is able and willing to pay damages: per Lindley LJ, at
pp 315 and 316. (4) The judicial discretion to award damages in lieu should pay
attention to well settled principles and should not be exercised to deprive a
claimant of his prima facie right “except under very exceptional circumstances”:
per Lindley LJ, at pp 315 and 316. (5) Although it is not possible to specify all the
circumstances relevant to the exercise of the discretion or to lay down rules for its
exercise, the judgments indicated that it was relevant to consider the following
factors: whether the injury to the claimant's legal rights was small; whether the
injury could be estimated in money; whether it could be adequately compensated
by a small money payment; whether it would be oppressive to the defendant to
grant an injunction; whether the claimant had shown that he only wanted money;
whether the conduct of the claimant rendered it unjust to give him more than
pecuniary relief; and whether there were any other circumstances which justified
the refusal of an injunction:
In setting out the factors which persuaded the court to grant an injunction, Mummery
LJ went through the Shelfer tests. The court held that the loss of light was not a small
injury and that £5000 was not a “small money payment”. Further it was not
oppressive to the Defendant to grant the injunction despite the fact that the loss to it in
cutting back its development was significantly more than the loss to the value of his
flat which the Claimant would suffer if the development went ahead.
27. This emphasis on the “exceptional” nature of the jurisdiction to award damages in
lieu and the narrow application of the so-called Shelfer principles was taken up again
by the Court of Appeal in the subsequent case of WATSON V CROFT PROMO-
SPORT. In that case an injunction was sought to restrain noise nuisance at a former
aerodrome which had been used for motor sport. In overturning the trial judge’s
decision to refuse an injunction and award damages in lieu instead, Sir Andrew
Morritt VC referred with approval to the judgment of Mummery LJ in the REGAN
case and (at paragraph 44) stated:
“It is clearly established by the decision of the Court of Appeal in Shelfer that
damages in lieu of an injunction should only be awarded under ‘very exceptional
circumstances’. It also established that the circumstance that the wrongdoer is in
some sense a public benefactor is not a sufficient reason for refusing an
injunction”
He continued (at paragraph 47) by referring to:
“…the limitations on [the court’s] discretion to withhold an injunction…”
28. These dicta, in my view, imposed an unwarranted and unnecessary straitjacket on the
court’s jurisdiction to award damages in lieu of an injunction. This new-found and
rigid emphasis on the so-called Shelfer principles and the exceptional nature of the
jurisdiction lead to the result in the case of HKRUK II V HEANEY [2010] 3 EGLR
15. In that case a Judge at first instance granted an injunction to compel the partial
demolition and removal of the (already completed) top two floors of a commercial
building which admittedly constituted an actionable interference with the right to
light in another nearby commercial building. The Judge, rigidly applying the Shelfer
principles and having cited the REGAN case, granted an injunction despite the fact
that (a) he would have awarded damages in lieu of £225,000 and (b) he held that the
works necessitated by the grant of the injunction would costs the Defending between
£1.1 and £2.5 million to carry out to which would be added the loss of future revenue
from the much reduced floor area which resulted.
29. It is hardly surprising in my view that the outcome of this case caused “something of
a stir” (to say the least) amongst developers.
30. However, it seems to me that, in this regard, the Coventry case has restored the law to
a much more sensible and flexible state.
THE COVENTRY CASE
31. Having reviewed the authorities, Lord Neuberger stated (paragraphs 116 to 118) that
there were two problems with the current state of the authorities:
(i) The first was what “at best might be described as a tension, and at
worst as an inconsistency, between two sets of judicial dicta since
Shelfer”
(ii) The second was “the unsatisfactory way in which it seems that the
public interest is to be taken into account when considering the issue
whether to grant an injunction or award damages”
32. He stated that, when asked to award damages in lieu instead of an injunction, the
courts approach should be much more flexible than suggested in the REGAN and
WATSON cases. Thereafter made a number of points which I derive as follows.
33. Firstly, he re-emphasised that the courts power to award damages instead of an
injunction is a classic exercise of discretion and should not, as a matter of principle,
be fettered as had been suggested in REGAN and WATSON. He cited with approval
that part of the judgment of Millett LJ in the JAGGARD case (set out above).
34. Secondly, he confirmed that the prima facie position is that an injunction should be
granted and that the legal burden was therefore on the defendant to show why one
should not be granted.
35. Subject to that, however, there was, he emphasised, no presumption or inclination by
the court one way or the other.
36. Fourthly, he reiterated that one of the relevant factors which can militate against the
award of damages can be that the defendant has acted in a high-handed manner and/or
attempted to steal a march on the claimant or to evade the jurisdiction of the court.
This has been a constant theme running through many of the authorities.
37. According to Lord Neuberger, there are no special rules applicable to rights to light
cases. On this point there was some disagreement. Both Lord Carnwath and Lord
Mance (at paragraphs 167 and 247) expressed caution at too direct a comparison
being made between the facts of cases such as the Coventry case (where the
injunction would limit rather than prevent altogether the activities complained of) and
rights to light cases (where the effect of an injunction may be “drastic” and result in
the demolition of an already constructed building). Lord Neuberger himself
recognised that, in cases involving nuisance by noise:
“there may be more wide ranging issues and more possible forms of relief than in
cases concerned with infringements of a right to light.
38. He held that, where it arose, public interest was as a matter of law a relevant factor in
the courts determination. He stated (at paragraph 124):
“The fact that a defendant's business may have to shut down if an injunction is
granted should, it seems to me, obviously be a relevant fact, and it is hard to see
why relevance should not extend to the fact that a number of the defendant's
employees would lose their livelihood, although in many cases that may well not
be sufficient to justify the refusal of an injunction. Equally, I do not see why the
court should not be entitled to have regard to the fact that many other neighbours
in addition to the claimant are badly affected by the nuisance as a factor in favour
of granting an injunction.”
This would presumably also allow the court to take into account the fact that the
wrongdoer was (to quote Lindley LJ in Shelfer) a “public benefactor” such as a utility
company.
39. In some cases, he held, the grant of planning permission for the complained of
activity may provide strong support for the contention that the activity is of public
benefit.
40. In an appropriate case, the court could take into account the following factors, namely
that to grant an injunction would either:
(i) involve loss to the public or a waste of resources on account of the
rights of a single claimant; and/or
(ii) involve the defendant in financial loss disproportionate to the damage
done to the claimant if left to a claim in damages.
41. And what of the Shelfer guidelines? In this respect there was a difference of
emphasis.
42. Lord Neuberger said this (at paragraph 123):
“First, the application of the four tests must not be such as “to be a fetter on the
exercise of the court's discretion”. Secondly, it would, in the absence of
additional relevant circumstances pointing the other way, normally be right to
refuse an injunction if those four tests were satisfied. Thirdly, the fact that those
tests are not all satisfied does not mean that an injunction should be granted.”
This might be seen to accord the guidelines some residual relevance as, perhaps, a
starting point in the exercise of the court’s jurisdiction
43. Lord Carnwath stated (at paragraph 239):
“I agree with Lord Neuberger PSC and the rest of the court that the opportunity
should be taken to signal a move away from the strict criteria derived from
Shelfer [1895] 1 Ch 287 . This is particularly relevant to cases where an
injunction would have serious consequences for third parties, such as employees
of the defendant's business, or, in this case, members of the public using or
enjoying the stadium.”
44. However Lord Sumption and Lord Clarke went much further. Lord Sumption said (at
paragraph 161):
“In my view, the decision in Shelfer [1895] 1 Ch 287 is out of date, and it is
unfortunate that it has been followed so recently and so slavishly. It was devised
for a time in which England was much less crowded, when comparatively few
people owned property, when conservation was only beginning to be a public
issue, and when there was no general system of statutory development control.
The whole jurisprudence in this area will need one day to be reviewed in this
court. There is much to be said for the view that damages are ordinarily an
adequate remedy for nuisance and that an injunction should not usually be
granted in a case where it is likely that conflicting interests are engaged other
than the parties' interests. In particular, it may well be that an injunction should
as a matter of principle not be granted in a case where a use of land to which
objection is taken requires and has received planning permission.”
This approach was endorsed by Lord Clarke who (at paragraph 171) said that:
“…the general principle is or should be that equitable relief will be granted
where it is appropriate and not otherwise and that, where damages are an
adequate remedy, it is inappropriate to grant equitable relief... I entirely agree
with Lord Sumption, at para 161, that the decision in Shelfer v City of London
Electric Lighting Co [1895] 1 Ch 287 is out of date and that it is unfortunate that
it has been followed so recently and so slavishly. Indeed, I would so hold now in
this appeal, although (in the absence of submissions) I would not now lay down
precise principles which should be followed in the future. They must be developed
on a case by case basis and in each case all will depend on the circumstances.”
45. Thus these two Judges (both former commercial practitioners) appear to have little
time for the principle that a court is not “a tribunal for legalizing wrongful acts”.
Indeed they might even have gone as far as to disapprove the proposition that the
burden was on the defendant to persuade the court that an injunction should not be
granted.
46. Whilst Lord Neuberger indicated (at paragraph 127) he “could see much merit” in
Lord Sumption’s proposals, he was not at present prepared to go further along that
route. Lord Mance, on the other hand, was not persuaded. He said, at paragraph 168:
“…the right to enjoy one's home without disturbance is one which I would believe
that many, indeed most, people value for reasons largely if not entirely
independent of money. With reference to Lord Sumption JSC's concluding
paragraph (para 161 above), I would not therefore presently be persuaded by a
view that “damages are ordinarily an adequate remedy for nuisance” and that
“an injunction should not usually be granted in a case where it is likely that
conflicting interests are engaged other than the parties' interests”—a suggested
example of the latter being given as a case where a use of land has received
planning permission. I would see this as putting the significance of planning
permission and public benefit too high, in the context of the remedy to be afforded
for a private nuisance.”
Lord Carnwath (at paragraph 247) agreed with Lord Mance as to the importance of
the right to enjoy ones home without disturbance.
INJUNCTION OR DAMAGES IN LIEU: CONCLUSIONS AFTER THE COVENTRY
CASE
47. What conclusions can one draw from this important case? Whilst there is much that is
left undetermined, there are in my view a number of points that can be made.
48. Firstly, any statement that the court can only award damages in lieu in an
“exceptional” case has been strongly disapproved. Although the burden is on the
defendant to persuade the court to award damages rather than an injunction, the
matter is one for the discretion of the court. To that extent the dicta in REGAN and
WATSON have (rightly in my view) been overruled.
49. The Shelfer guidelines, if relevant at all, are at most just that: guidelines. They are not
principles to be rigidly applied. They are almost certainly no longer a “good working
rule”. They cannot trammel the exercise of the court’s discretion.
50. As the Court emphasised that the matter is one of the flexible and fact sensitive
exercise of discretion, even Millett LJ’s “oppression” test is probably not appropriate.
There are no artificial constraints on the factors which the court can take into account
in the exercise of its discretion. If relevant, the court can take into account: the public
interest; the grant of planning permission; the disproportionate effect on the defendant
if an injunction is granted when compared to the loss to the claimant if damages are
awarded.
51. There may be different considerations in rights to light cases. Courts may be more
reluctant to grant mandatory injunctions to compel the removal of buildings in rights
to light cases than they are to grant injunctions to control or limit (but not totally
prevent) activities which cause noise nuisance. My view is that the HKRUK II V
HEANEY case would almost certainly be decided differently now.
52. On the other hand courts may be more ready to grant injunctions to protect the rights
of homeowners than they will be to restrain activities which interfere with the
occupation of commercial premises.
53. As I stated at the outset of this paper, the decision in the Coventry case is, in my
view, to be welcomed. Albeit at the expense of a degree of uncertainty, it restores a
welcome degree of flexibility to this area of the law and will permit courts to apply
that law in a much more sensible and commercial way.
CALCULATION OF DAMAGES IN LIEU
54. It is finally worth spending a little time on what was said in relation to the calculation
of damages in lieu.
55. Recent case law has supported an approach to the calculation of damages in lieu on
the “wayleave” or “negotiating” basis. In WROTHAM PARK V PARKSIDE
HOMES [1974] 1 WLR 798, Brightman J said this:
“In my judgment a just substitute for a mandatory injunction would be such sum
of money as might reasonably have been demanded by the plaintiffs from
Parkside as a quid pro quo for relaxing the covenant”.
This measure has been contrasted with damages based on the diminution of value of
the wronged party’s property on the assumption that the latter is a significantly lesser
sum than the former.
56. Negotiating damages have been awarded for many years in cases of trespass (see
JEGON V VIVIAN (1871) LR Ch App 742, BRACEWELL V APPLEBY [1975] Ch
408). This measure has also been applied in cases involving breaches of restrictive
covenant (WROTHAM PARK and JAGGARD V SAWYER) and nuisance, in
including interference with rights to light, (CARR-SAUNDERS V McNEIL [1986] 1
WLR 922 and TAMARES V FAIRPOINT (No.2) [2007] 1 WLR 2167).
57. Such damages have frequently been calculated based on a percentage share of the
profit made by the wrongdoer. There is a good general discussion of the applicable
principles in EATON MANSIONS V STINGER [2013] EWCA Civ 1308.
58. However, the propriety of awarding negotiating damages in lieu of an injunction in
nuisance cases (at least) was doubted (albeit obiter) by several of their Lordships in
the Coventry case.
59. Lord Carnwath made the point most forcefully. He said (at paragraph 248):
“…without much fuller argument than we have heard, I would be reluctant to
open up the possibility of assessment of damages on the basis of a share of the
benefit to the defendants….Jaggard v Sawyer [1995] 1 WLR 269, to which Lord
Neuberger PSC refers, gives Court of Appeal support for an award on that basis
for trespass or breach of a restrictive covenant, but the same approach has not
hitherto been extended to interference with rights of light: see Forsyth-Grant v
Allen [2008] Env LR 877. In cases relating to clearly defined interference with a
specific property right, it is not difficult to envisage a hypothetical negotiation to
establish an appropriate “price”. The same approach cannot in my view be
readily transferred to claims for nuisance such as the present relating to
interference with the enjoyment of land, where the injury is less specific, and the
appropriate price much less easy to assess, particularly in a case where the
nuisance affects a large number of people. Further, such an approach seems to
represent a radical departure from the normal basis regarded by Parliament as
fair and appropriate in relation to injurious affection arising from activities
carried out under statutory authority.”
60. Lord Carnwath’s approach no doubt derives from his vast experience of planning law.
Claims for what is known as injurious affection following exercise by a local
authority of powers under section 237 of the Town and Country Planning Act 1990 or
compulsory purchase under section 68 of the Land Clauses Consolidation Act 1845
and section 109 of the Compulsory Purchase Act 1965 are calculated on the basis of
diminution in value and not on a negotiating damages basis. He presumably thinks
that it is wrong for landowner’s loss to be calculated in one way for an interference
with the enjoyment of his land following the exercise of statutory powers but in a
different and more advantageous way for loss following the exercise by a court of its
discretion to refuse injunctive relief.
61. His views attracted some support from Lord Neuberger who (at paragraph 128) said:
“It seems to me at least arguable that, where a claimant has a prima facie right to
an injunction to restrain a nuisance, and the court decides to award damages
instead, those damages should not always be limited to the value of the
consequent reduction in the value of the claimant's property. While double
counting must be avoided, the damages might well, at least where it was
appropriate, also include the loss of the claimant's ability to enforce her rights,
which may often be assessed by reference to the benefit to the defendant of not
suffering an injunction.”
But added (at paragraph 131):
However, there are factors which support the contention that damages in a
nuisance case should never, or only rarely, be assessed by reference to the benefit
to the defendant in no injunction being granted, as pointed out by Lord Carnwath
JSC in para 248 below. For that reason, as well as because we have not heard
argument on the issue, it would be inappropriate for us to seek to decide on this
appeal whether, and if so in what circumstances, damages could be recoverable
on this basis in a nuisance claim.”
62. Lord Clarke however seems not to share these doubts. He said (at paragraph 173):
“I would leave open the question whether it may in some circumstances be
appropriate to award what have been called gain-based damages in lieu of an
injunction…it does seem to me that, where a claimant is seeking an injunction to
restrain the noise which has been held to amount to a nuisance, it is at least
arguable that there is no reason in principle why a court considering whether or
not to award damages in lieu of an injunction should not be able to award
damages on a more generous basis than the diminution in value caused by the
nuisance, including, for example, an award which represented a reasonable price
for a licence to commit the nuisance…If that can be done in trespass I do not at
present see why it should not in principle be done in nuisance in a case like this,
where a similar payment would give the respondents the right to commit what
would otherwise be a nuisance by noise. Moreover…there may be scope for
assessing the claimant's loss by reference to the benefit to the defendant of not
suffering an injunction”
63. As already stated, Lord Sumption’s view was that damages should ordinarily be an
adequate remedy for nuisance. He added that:
“The whole jurisprudence in this area will need one day to be reviewed in this
court”
64. In this regard, as with the circumstances in which damages in lieu will be awarded in
the first place, it seems that there is much further to come.
© David Holland QC 2014
This seminar paper is made available for educational purposes only. The views expressed
in it are those of the author. The contents of this paper do not constitute legal advice and
should not be relied on as such advice. The author and Landmark Chambers accept no
responsibility for the continuing accuracy of the contents